The general remedy for those who are uneasy without knowing the cause is change of place.
The bulls seem to be looking for some change and appear to have gone on an early Christmas holiday. Global stocks have struggled lately in making much headway amid some concerns about pricey valuations and the strength of the economic recovery. The markets are a bit nervous as economic rebound could spring a surprise, leading to an early exit from easy money policy. What is also making the markets jittery is a possible reversal in the trend in fund flows. For lack of other triggers, all eyes are fixed on how the dollar behaves and what happens to US interest rates.
Friday’s strong jobs data has set the cats among the pigeons. It remains to be seen how upcoming data unfolds, both in the US and elsewhere. Talking of data, Indian market will react to the latest IIP on Friday.
We expect a cautious to positive start and another sideways trading session. There might be a bounce back if the global trend improves. That in turn could force the bears to cover their shorts. Overall, the market will remain rangebound amid uncertainty over the near-term outlook.
FIIs were net sellers in the cash segment on Monday at Rs1.91bn on a provisional basis. The local funds were net sellers of Rs1.85bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs8.15bn. FIIs were net buyers of Rs4.45bn in the cash segment on Friday. FIIs' net investments in Indian stocks this year have crossed $16bn. Mutual Funds were net sellers of Rs957mn in the cash segment on Friday.
The dollar extended its gains on Monday, hitting a one-month high following a sharp rally on Friday after US employment data came in far better than expected. That report has re-ignited fears that the Federal Reserve could hike interest rates sooner than expected.
Fed chief Ben S. Bernanke says that the US central bank will raise interest rates to keep inflation under control, but that time could be far away. With the US economy still very fragile and unemployment so high, inflation is not a pressing problem right now, Bernanke said in a talk to a group of economists in Washington.
Back home, the Reserve Bank of India (RBI) Governor D Subbarao said on Monday that food inflation is a supply-side phenomenon and monetary policy is an ineffective instrument to rein in growth in such prices. Still, if food inflation persists for a long time, it could hamper inflation expectations, Subbarao said in Mumbai. "Certainly, then monetary policy has to come in," he added.
Gold prices fell on Monday, extending Friday’s correction, while oil prices dipped and base metals retreated amid some strength in the dollar. Meanwhile, President Obama has backed a House proposal to spend leftover TARP funds on stimulus spending and create new jobs. The Japanese government has today unveiled a 7.2 trillion yen ($81bn) economic spending package.
US stocks closed mixed on Monday at the end of a choppy session which was affected by a slight recovery in the dollar, falling oil and gold prices and comments from Fed chairman Bernanke that eased worries about higher interest rates.
The Dow Jones Industrial Average was barely changed, at 10,390.11. The S&P 500 index lost 3 points, or 0.3%, to 1,103.25. The Nasdaq Composite index shed 5 points, or 0.2%, to 2,189.61.
Stocks were pretty volatile as investors weighed Bernanke's comments, the direction of the dollar and commodity markets in the aftermath of last week's big payrolls report. Stocks had gained on Friday at the end of a bumpy session following a better-than-expected November jobs report.
That report was another strong sign that the world's largest economy had turned a corner, but it also raised questions about whether the Fed will need to raise interest rates faster than has been expected. Such concerns kept the market nervous on Monday morning, sending the dollar higher and dollar-traded commodities lower as investors avoided riskier assets.
But in the afternoon, Bernanke seemed to downplay the likelihood of a rate hike, saying in a speech at the Economic Club of Washington that it is too soon to say whether the slowly-germinating recovery will last. The Fed has kept short-term interest rates at historic lows near zero for a year and is expected to continue to do so to support the recovery. Bernanke also said the central bank will make money on the trillions it has pumped into the economy over the last two years.
Bank stocks were among the big decliners, with the KBW Bank Sector index losing 1.6%. Railroads, trucks and airlines slipped too, with the Dow Jones Transportation average losing 1%.
The Obama administration is expected to cut the cost of the bank bailout plan by almost 60%, in a move that could help trim the ballooning deficit. The White House is expected to announce in coming days that it will slash the cost of the Troubled Asset Relief Program (TARP) by $200 billion, bringing the long-term cost to $141 billion. The money not used for the TARP could be used toward creating a new national jobs program or for paying down the deficit.
Americans borrowed less in October, for a record ninth straight month, according to a Federal Reserve report. Consumer credit fell at an annual rate of $3.51 billion in October after falling at an $8.77 billion annual rate in September. Economists had forecast a rise to a $9.3 billion annual rate.
COMEX gold for February delivery fell $5.50 to settle at $1,164 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last week. Dollar-traded gold tumbled as the dollar firmed up.
The dollar gained versus the euro and slipped against the yen, causing dollar-traded oil prices to slide.
US light crude oil for January delivery fell $1.74 to settle at $73.93 a barrel on the New York Mercantile Exchange.
Treasury prices rose, lowering the yield on the 10-year note to 3.42% from 3.47% late on Friday.
European shares edged lower, paced by weakness in banks. The pan-European Dow Jones Stoxx 600 index, which posted gains of 2.7% last week, took a breather, closing down 0.5% at 247.88.
The UK's FTSE 100 index fell 0.2% to 5,310.66, while Germany's DAX index lost 0.6% to 5,784.75 and the French CAC-40 index slipped 0.2% to 3,840.05.
Unlike Dhoni's boys, the Indian market was unable to triumph in their quest for breaking out of a range. The NSE Nifty continued its struggle to breach the year's high of 5182 which has acted as a hurdle for the bulls for the past few weeks.
The Sensex started off the new trading week on a flat note on the back of mixed cues from the Asian markets. However, as the day progressed bears tightened their grip on the bourses. Selling was seen in Metals, Realty and Oil & Gas stocks. As a result the Nifty and the Sensex fell below 5100 and 17000, respectively.
Weak opening in the European markets further dampened the sentiment. Just as one thought worries regarding Dubai's debt problems were starting to ease, it was back to haunt traders and investors. The Dubai DFM General Index slipped 6.1% from day's high after reports stated that the Dubai's government will not sell any assets to meet the obligations of Dubai World.
The BSE Sensex slipped 118 points to end at 16,983 after touching a high of 17,176 and a low of 16,943. The index opened at 17,106 against the previous close of 17,101. The NSE Nifty was down 42 points to shut shop at 5,066.
In Asia, the Nikkei in Japan was up 1.4%, while Australia's S&P/ASX ended lower by 0.5%. Shanghai SE Composite in China gained 0.5% and Hang Seng index in Hong Kong was down 0.8%.
In Europe, stocks were in the red. The FTSE in the UK was down 0.5%, The DAX in Germany was down 0.5% and the CAC 40 index in France gained 0.7%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top loser, shedding 3.2%, followed by the Realty index that was down 2.5% and the BSE Oil & Gas index was down 2%. The BSE Mid-Cap index slipped 0.8% and the BSE Small-Cap index was up 0.5%.
Bucking the negative trend were, BSE Capital Goods index up 0.7% and BSE Teck index up 0.3%.
Among the 30-components of Sensex, 20 stocks ended in the red and 10 ended in the positive terrain. Sterlite Industries, Tata Steel, Hindalco, RIL, DLF and M&M ended in the negative terrain. Among the major gainers were Bharti Airtel, HDFC, L&T, HDFC Bank and Hero Honda.
Outside the frontline indices, the big losers in the broader market were Tata Comm, Godrej Industries, Tulip and REC Ltd. On the other hand, gainers included Piramal Health, Cummins India, Indian Hotels and GSPL.
Shares of Reliance Power slipped by 3.5% to end at Rs145 after the Allahabad High Court quashed the Uttar Pradesh government's earlier notification allowing the use of emergency powers to buy land for the Dadri power project, side-stepping a provision inviting objections from land owners.
However, the company denied media reports that a provincial court has stopped the acquisition of land for a gas-fired power project being built by the company in northern India, Jayarama Chalasani, CEO of Reliance Power Ltd., said.
ABB won an order worth Rs5.06bn from Bangalore Metro Rail Corporation Limited (BMRCL) to provide power solutions for a planned metro network in Bangalore, India’s leading technology hub.
Shares of ABB have shot up from days low and ended higher by 0.4% at Rs735. The scrip opened at Rs739 it touched an intra-day high of Rs745 and a low of Rs731 and recorded volumes of over 0.16mn shares on BSE.
Andhra Pradesh Power Generation Corporation Limited has placed an order on BHEL for the country’s first Phase Shifting Transformer valued at Rs270mn, the order entails installation of an indigenously-developed Phase Shifting Transformer, to be installed at APGENCO’s Kothagudem Thermal Power Station (KTPS) Stage-VI.
Shares of BHEL have edged higher by 0.3% to end at Rs2214. The scrip opened at Rs2210 it touched an intra-day high of Rs2235 and a low of Rs2201 and recorded volumes of over 0.1mn shares on BSE.
Suzlon overseas unit, REpower Systems AG, announced the signing of a delivery agreement with limited condition precedent for up to 143.5MW with the American Company enXco - an EDF Energies Nouvelles Company.
The 70 REpower MM92 turbines (each with a rated power of 2.05MW and rotor diameter of 92.5 meters) are intended for a wind farm project in the West Coast market for delivery in mid-2011.
Shares of Suzlon Energy surged over 5% to end at Rs83. The scrip opened at Rs80 it touched an intra-day high of Rs83.85 and a low of Rs79.05 and recorded volumes of over 10.8mn shares on BSE.
Heineken N.V. announced it has signed a new shareholders' agreement with United Breweries Limited and agreed the key terms for the brewing and distribution of the Heineken brand in India. The new agreement creates a strong partnership that will drive growth in one of the world's fastest growing and most exciting beer markets.
Shares of United Breweries surged 4.7% to end at Rs191.50. The scrip opened at Rs187 it touched an intra-day high of Rs201 and a low of Rs169 and recorded volumes of over 0.68mn shares on BSE.
Shares of Adhunik Metaliks shot up by over 7% to end at Rs104 after the company received final approval from Ministry of Environment & Forests, Government of India for diversion of forest land in village-Deojhar, Kulum and Mahadebnas of Barbil Tahasil in Keonjhar district of Orissa for mining of Iron Ore out of its captive mine.